<<<California ($1,727 billion), Arizona ($232 billion), Nevada ($117 Billion) and Florida ($713 billion), made up 21% of the US economy in 2006
Job losses just starting in NYC - won't be as bad as CA/FL but these are VERY well compensated people and their multiplier effect is much more than a guy working at Home Depot.
And you left out MI and OH Ohio $461M Michigan $381M
Do you consider PA to be a strength? IL? $1.1B GDP between those 2 - I am not saying they are as bad as MI/OH or CA but not exactly pillars of strength.
They already have dropped so it won't be a new drop, but it is a permanent moribound situation. CA alone is enough to make most worry - I believe if it were its own country its GDP would be like 7th biggest in the world (or 8th)
I think people who look at the economy or housing prices think its stock prices. Things do not turn on a dime. As for the mid Atlantic strength if you are talking Washington DC yeah - they have unlimited spending so there are no job cuts. Federal govt can add jobs.
Have you thought about the impact of lower state revenues in our major states? As housing stock price falls, revenue fall WITH a lag. Then what happens to jobs? And spending? That doesnt turn on a dime as stock prices do. Same with house prices. Reluctant sellers still stuck in 2006 pricing don't sell and they sit and sit and sit. It took 4+ years for MI residents to finally get to the point they realize they have to sell and things won't "rebound". So for those states seeing a correction you wont see it in home prices in 6 months or 12 months. I saw on Fox Business this week a bunch of homes in DC area/Maryland. They are foreclosed (some brand new) and they want on auction where true supply/demand prices can be achieved. From the price they "last sold" (to the foreclosed owner) they dropped from 20-33%. So thats "true market" value. So are national home builders who are now selling at 30%+ below 2006 levels.
Stubborn sellers who refuse to sell because they believe their house is worth more is not true value.
But I think you really underestimate the hit to state governments - so much of our economy is based on inflated home prices. People just don't realize it. Schools will cut back spending, road work, city service like police/fire, etc - all those are jobs that need to be cut because revenues will be faltering but that stage has not even begun for most states. It will start to appear by end of THIS year. Then 2009 it will really hit.
Maybe a better way to look at things is where is strength? Then balance against the ledger of where is weakness?
Strength? Texas $1B GDP NC $375M VA $370M WA $300M
and then some agricultural states which are far smaller
So I buy the "its regional" thesis, but the states of strength ex Texas are not the size of the states of weakness.